By Paul A. Brooks
PMB Ventures Founder
The Fed inability to respond, in a timely manner, to prevailing economic conditions is costing us dearly. This begs the question, why the lackluster management performance by Mr. Bernanke and the governing board. Is it a lack of timely reliable data, the conflicting concerns about Inflation vs. Recession or just incompetence on their part to grasp the severity of the economic conditions that plague the economy?
To answer this question, one has to step into their shoes, adorn their academic hats and ponder the issue. This said it appears the Fed approaches the process as an academic exercise. Given this observation, the critical element in the decision making process is empirical data. Without this most academians would be hesitant to make a decision much less commit themselves to a course of action; here in lies the dilemma.
Setting sound economic policy is dependent on the quality, accuracy, reliability, and timeliness (lags the economy) of the data used in the process. In addition, critical to the Data are the assumptions and estimates used in its derivation. This being the case, errors maybe introduced into the process prior to actual policy being made.
Managing the economy is akin to preserving our Democratic freedom from hostile foreign entities. With this in mind, we need to ensure that the weaponry use in fighting the economic insurgence, that threatens our way of life, is reliable and timely. No not Al-Qaeda, but Data; making decisions or lack there of and setting policy based on inaccurate information is a problem that has to be acknowledged and rectify. There is no reason why the information needed to monitor the pulse of the nation’s economy cannot be gathered and made available in real-time.
If automating Corporate Balance Sheets, in real-time, have been a priority for Financial and Corporate institutions then the same should hold true for the stewards responsible for the economic governance of our economy. Though this is a daunting task we do have the intellectual, technological and financial resources to make this a reality. Or minimally a debate surrounding the benefits or lack of, should be an issue on the minds that govern us.
To follow: How is this possible
Monday, March 3, 2008
Saturday, January 26, 2008
The U.S. Economy A Different Prospective: The “Sub-Economy” – The underutilized work force
By Paul A. Brooks
PMB Ventures Founder
This blog examines the US economy from a different prospective.
The intent is to analyze the impact the underutilized work force has on the social and economic wealth of the American society.
We define this work force to consists of individuals compel to take jobs below their skill and or educational levels, due to lay offs, company closers, down sizing, and disenchanted individuals who joint the ranks of the chronically unemployed.
With professional, manufacturing and high skilled jobs being out sourced and replaced with lower paying service industry jobs, the U.S. economy, is creating a work force under siege. In essence, it is continually generating a social economic divide, with a shrinking middle class, and increasing the ranks of the lower end of the economic middle class. This in turn, is adversely reducing consumer spending and consumption levels whilst lowering the quality of life for those families. The effects can be seen in increasing household debt such as credit cards, loan defaults, the need to creatively generate additional funds, by re-financing ones home, thus falsely inflating consumer prosperity and artificially stimulating the economy, potentially creating a balloon effect and synthetically prolonging the economic expansion cycle.
With each economic down turn, companies are forced to cut operating cost, leading to job freezes and employee layoffs, thus perpetuating the every ending feast or famine cycle. With each cycle down turn, an additional layer of disenfranchised individuals is added to the existing pool of the unemployed ranks. While the majority of these individuals will be rehired, the question then becomes, are they rejoining the work force at or above the level at which they were let go. The level referred to is defined by their skills & educational set, salary, benefits and job satisfaction. In addition, what percentage return to work below their prior level and the number of individuals that were unable to find employment. The individuals that were unable to find employment, and exhaust their unemployment insurance, including out of work self employed, are considered the high-risk pool.
These are the populous, that fall off the radar and seamlessly become non-existent. Though the Bureau of Labor Statistics (BLS) attempts to capture these individuals (the so called U1, U4, U6 etc. measure, with U6 measuring the broadest group of underutilized workers) in their unemployment report, the accuracy is highly questionable.
These are the individuals that we refer to as being members of the “sub economy”.
To follow
The U.S. Economy A Different Prospective: The Social-Economic Effect Of The Sub-Economy
....
PMB Ventures Founder
This blog examines the US economy from a different prospective.
The intent is to analyze the impact the underutilized work force has on the social and economic wealth of the American society.
We define this work force to consists of individuals compel to take jobs below their skill and or educational levels, due to lay offs, company closers, down sizing, and disenchanted individuals who joint the ranks of the chronically unemployed.
With professional, manufacturing and high skilled jobs being out sourced and replaced with lower paying service industry jobs, the U.S. economy, is creating a work force under siege. In essence, it is continually generating a social economic divide, with a shrinking middle class, and increasing the ranks of the lower end of the economic middle class. This in turn, is adversely reducing consumer spending and consumption levels whilst lowering the quality of life for those families. The effects can be seen in increasing household debt such as credit cards, loan defaults, the need to creatively generate additional funds, by re-financing ones home, thus falsely inflating consumer prosperity and artificially stimulating the economy, potentially creating a balloon effect and synthetically prolonging the economic expansion cycle.
With each economic down turn, companies are forced to cut operating cost, leading to job freezes and employee layoffs, thus perpetuating the every ending feast or famine cycle. With each cycle down turn, an additional layer of disenfranchised individuals is added to the existing pool of the unemployed ranks. While the majority of these individuals will be rehired, the question then becomes, are they rejoining the work force at or above the level at which they were let go. The level referred to is defined by their skills & educational set, salary, benefits and job satisfaction. In addition, what percentage return to work below their prior level and the number of individuals that were unable to find employment. The individuals that were unable to find employment, and exhaust their unemployment insurance, including out of work self employed, are considered the high-risk pool.
These are the populous, that fall off the radar and seamlessly become non-existent. Though the Bureau of Labor Statistics (BLS) attempts to capture these individuals (the so called U1, U4, U6 etc. measure, with U6 measuring the broadest group of underutilized workers) in their unemployment report, the accuracy is highly questionable.
These are the individuals that we refer to as being members of the “sub economy”.
To follow
The U.S. Economy A Different Prospective: The Social-Economic Effect Of The Sub-Economy
....
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